International Monetary Fund Says Europe Should Weigh Bond-Buying

LUXEMBOURG — The International Monetary Fund on Thursday said that if inflation continued to drag, the euro zone’s central bank could do more to invigorate the economy by buying government bonds and other financial assets.

Such a program would in effect emulate the Federal Reserve’s stimulus efforts. The I.M.F., in its annual report on the euro-currency union, also criticized its rules for managing national budgets as complicated and poorly enforced — even as some member nations continue to call for greater leeway.

The stimulus recommendation from the I.M.F., which included a presentation Thursday evening by the fund’s managing director, Christine Lagarde, was made here at a meeting of finance ministers from the 18-country euro zone. It aligned the fund with a chorus of economists urging more aggressive action to stimulate the euro zone’s barely growing economy and address its troublingly low levels of inflation.

The fund, in other words, may be calling for the European Central Bank to engage in a stimulus program similar to the Federal Reserve’s so-called quantitative easing in the United States — a big bond-buying program that the Fed is only slowly ending.

Asked during a news conference what was meant by “stubbornly low,” Ms. Lagarde said it applied when measures taken to fight weak inflation were “not operative.” Low meant “obviously way below” the 2 percent inflation rate target and “it seems to us we are currently in that zone,” she said.

A top official of the European Central Bank, speaking Thursday in Athens, expressed a willingness by the bank to follow Ms. Lagarde’s advice, though perhaps not as quickly as she would like.

The central bank is ready to begin large-scale asset purchases if it becomes clear that the euro zone economy faces “a protracted period of low inflation and economic stagnation,” Vítor Constâncio, the vice president of the central bank, said, according to the text of a speech delivered at a conference in Athens.

Mario Draghi, the central bank’s president, has previously said that asset purchases were an option.

Mr. Constâncio’s remarks Thursday were perhaps the most explicit declaration yet of the bank’s willingness to emulate the Fed’s program. He suggested that the central bank could find a way to introduce quantitative easing in the euro zone despite the lack of any pan-European government bond analogous to the United States Treasury securities purchased by the Fed.

Some economists have questioned whether, because of the fragmented bond market, it would even be possible to conduct quantitative easing in Europe.

“The experience of other countries with such programs testifies that they can be effectively designed,” Mr. Constâncio said.

But Mr. Constâncio added that he saw only a “low probability” that an extended period of stagnation and low inflation would occur. And he cautioned that asset purchases by the central bank would be effective only if governments also took steps to improve the performance of their economies.

His remarks implied that, in return for stimulus action, the European Central Bank might demand that countries like France pursue economic changes the bank considers long overdue.

Another issue at the ministers meeting in Luxembourg was whether the bloc’s budget rules remain so rigid that they actually damage growth.

Some governments and leaders are skeptical of the benefits of deficit limits and the push for austerity in recent years. Those leaders are seeking to reopen the issue with the backing of the Socialist group in the newly elected European Parliament.

The push for changing European Union policies to do more to promote growth appeared to be gaining traction on Thursday amid suggestions by diplomats and European officials that left-leaning European leaders could meet on Saturday in Paris with President François Hollande of France to discuss the issue, according to a report by Reuters.

Those leaders, who could include the Italian prime minister, Matteo Renzi, would be likely to make broader support for anti-austerity policies a precondition of supporting Jean-Claude Juncker to lead the European Commission, when European Union leaders gather for a summit meeting at the end of next week.

But that would invite a clash with Britain, which bitterly opposes the appointment of Mr. Juncker, a former prime minister of Luxembourg, on the grounds that he is too supportive of a federalist vision for Europe, and was foisted on leaders by the European Parliament.

Arriving at the meeting, Michel Sapin, the French finance minister, said his government was not demanding a change to the rules. Instead, he said, “We first need to find the right rhythm for each of our member states” allowing for “an orderly decrease of the debt situation and a decrease in the deficit that take place in conditions compatible with, and even helpful to, growth.”

Pier Carlo Padoan, the Italian minister for the economy and finance, also suggested that his government did not want wholesale changes. But there is “need to put in place all the instruments the E.U. already has to speed up growth and create jobs,” he told reporters in Luxembourg.

Suggestions on changing the system earned a frosty reception from Wolfgang Schäuble, the German finance minister. “The current rules offer enough flexibility,” he said. “It’s not necessary to change the rules — but to follow them,” he told reporters.

Ms. Lagarde, the I.M.F. head, told the news conference that the current rules need “simplification to ensure there are no differences of interpretation and to put an end to therisk of complexity.” But she acknowledged that was “not something that can be done overnight.”

In its report, the fund called for a “simpler framework” based on the goal of reducing debt levels.

Under European Union rules, governments in the 28-member bloc must keep their public deficit at no more than 3 percent of gross domestic product.

But France is struggling to meet a 2015 deadline to bring its deficit below that level. And Italy, whose deficit came in right at the 3 percent ceiling last year, still faces the task of devising a strategy to prune its huge debt.

A version of this article appears in print on , on Page B3 of the New York edition with the headline: I.M.F. Says Europe Should Weigh Bond-Buying if Prices Drag. Order Reprints | Today’s Paper | Subscribe